These Funds Were QE3′s Biggest Winners (And One Loser)

By Brendan Conway

You know what surged with the unveiling of the third round of Federal Reserve quantitative easing this month: Stocks, metals, gold, and all manner of “risk on” bets. You might be interested also to see a quantitative look at which QE3-friendly fund managers prospered right away. Hint: You’ve heard of the top two.

While both managers are known for their high conviction, highly concentrated portfolios (CGMFX recently reported 22 holdings, 70% in top 10) and significant turnover, these charts suggest the funds were right in the QE3 sweetspot. FAIRX’s real estate sector exposures (Dow Jones U.S. Real Estate Investment & Services Index rose 9.9% in the period) likely helped its cause; additionally, our factor analysis shows FAIRX exposure to Real Estate rising since their last filings at the end of Q2. For Heebner, his reported negative exposure to cash and bullish commentary of late would suggest his market exposure and implied leverage (which our model also shows to have increased from last filings were made; see related footnote) put the wind at CGMFX’s back.

Meanwhile, the staid stuff fell behind. The PowerShares S&P 500 Low Volatility Portfolio (SPLV), one of the biggest asset draws among new exchange-traded funds, was true to its name: It didn’t even budget 1% on a NAV basis during the period.

About Focus on Funds

As exchange-traded funds and other investing vehicles have ballooned in number, the task of figuring out what works well and what doesn’t has only gotten harder. Barrons.com’s Focus on Funds looks under the hood of ETFs, mutual funds and hedge funds for overlooked values, actionable ideas and the latest pitfalls for fund investors.